California Low Carbon Fuel Standard (LCFS) credits traded down to $62.75/t as traders reacted bearishly to a public workshop held by CARB on April 10 which was short on details and differed little from the original December 2023 proposal. The March market reached as high as $66.81/t ahead of the workshop, before materials released on April 9 showed CARB would not be considering a 35% step down for 2030.
CARB's April 10, 2024 workshop modeled 7% and 9% step-downs for 2025 compared to the originally proposed 5% stepdown, while maintaining a 2030 target reduction of 30%. CARB also modeled a scenario in which the auto-acceleration mechanism was triggered twice, resulting in a drawdown of 170MM credits. CARB is considering sustainability guardrails as well as requiring an independent feedstock certification process. Stakeholders urged CARB to pursue the most aggressive 9% stepdown and displayed a preference for the program to be managed through more precise targets, relying less on the AAM for ease of planning and to drive investment.
Oregon LCFS credit prices spent the bulk of March around the $75.00/t mark, after closing the month of February at $78.00/t. The market started April at $72.00/t, before slipping to $68.50/t by midmonth, down 24% since the start of the year. The state’s spot credit price narrowed to a premium of $5.2/t to California LCFS credits and $30/t to concurrent Washington CFS credits.
IN THIS REPORT AEGIS EXAMINES: